Article
⚡️BlackRock 6 years, shifted to overweight short-term U.S. Treasuries for the first time and downgraded U.S. equities
BlockBeats reported that October 13, the BlackRock Investment Institute adjusted its U.S. asset allocation, upgrading short-term U.S. Treasuries to overweight and long-term U.S. Treasuries from underweight to neutral, ending its nearly 6-year underweight stance on U.S. Treasuries. At the same time, the institute downgraded U.S. equities from overweight to neutral, lowered the rating on U.S. agency mortgage-backed securities (MBS) to neutral, and reduced its underweight position in Japanese government bonds.
BlackRock has kept U.S. Treasuries underweight since 2020 in October, when the yield on the 10-year U.S. Treasury approached 0.9%, and has now risen above 5.2%. The institute believes yields have reached attractive levels and wants to lock in some of the higher yields; expectations of further monetary-policy tightening by the Federal Reserve may also be excessive.
At present, the interest-rate swap market reflects traders’ expectations of at least three rate hikes over the next 12 months, of 25 basis points each. BlackRock noted that Treasury yields would need to rise another 12 basis points over the next 75 months to fully offset the returns earned on the bonds.
Regarding U.S. equities, BlackRock attributed the downgrade to the “potential volatility arising from artificial intelligence buildout.” As AI buildout drives higher capital expenditures and financing needs, high interest rates make differences in returns between companies more pronounced, and investors need to assess whether companies can generate returns above their cost of capital. The institute emphasized: “We are managing near-term risks, not changing our core beliefs.” BlackRock remains positive on AI-related companies and listed infrastructure, and is prepared to increase risk exposure again when visibility improves and attractive entry points emerge.
Original link https://m.theblockbeats.info/flash/371474